From the November 2009 issue of Research Magazine • Subscribe!

November 1, 2009

New ETF Offerings Hit the Street

New offerings from ETF providers in the third quarter of 2009 include funds with a focus on muni bonds and emerging markets.

It was a busy third quarter for ETF providers, as they introduced new products to meet market demand and round out their fund lineups.

State Street Global Advisors introduced the SPDR Wells Fargo Preferred Stock ETF (PSK) and the SPDR S&P VRDO Municipal Bond ETF (VRD). PSK is linked to the Wells Fargo Hybrid and Preferred Securities Aggregate Index, which includes around 160 securities.

PSK's underlying index includes non-convertible preferred securities listed on the NYSE or NYSE Arca that have a par amount of $25, are rated investment grade by Moody's or Standard & Poor's and have a minimum monthly trading volume during each of the past six months of at least 250,000 trading units.

"The SPDR Wells Fargo Preferred Stock ETF provides financial advisors and investors with improved access to the benefits of this unique asset class, which include high yields and a low correlation to both bonds and common stock," said Anthony Rochte, senior managing director at State Street Global Advisors. PSK's annual expense ratio is 0.45 percent.

Another newly launched ETF is the SPDR S&P VRDO Municipal Bond ETF (VRD). The fund provides access to municipal variable rate demand obligations (VRDOs), an asset class offering attractive yields and stable income that is exempt from federal taxes and often state and local income taxes as well.

VRD is benchmarked to the price and yield performance of the S&P National AMT-Free Municipal VRDO Index. As of September 21, the index (which includes VRDOs issued by states, local governments and other agencies) provided exposure to more than 377 issues.

"Developed in response to increasing demand for VRDOs, the SPDR S&P VRDO Municipal Bond ETF provides investors with access to a hard-to-reach corner of the municipal bond market where the required minimum denomination for issue purchase is $100,000," said James Ross, senior managing director at State Street Global Advisors. VRD's annual expense ratio is 0.20 percent.

The Emerging Global Shares Dow Jones Emerging Markets Financials Titans Index Fund (EFN) also debuted. The fund is the fourth ETF from Emerging Global Advisors and it'll be benchmarked to 30 global financial stocks selected by Dow Jones. EFN's net annual expense ratio is 0.85 percent.

Trading for the AdvisorShares Dent Tactical ETF (DENT) has initiated. The DENT ETF has the flexibility of investing in foreign or domestic securities in multiple asset classes. The ETF is sponsored by AdvisorShares and invests in other ETFs based upon the firm's proprietary research. H.S. Dent Investment Management is a sub-advisor to the fund. DENT's annual expense ratio is 1.59 percent and it includes the fees for the portfolio's underlying ETFs

Finally, the ETFS Physical Swiss Gold Shares (SGOL) was launched. The new gold fund will compete with established gold ETFs like the iShares COMEX Gold Trust (IAU) and the SPDR Gold Shares (GLD). IAU has around $2.4 billion in assets and GLD at $34 billion has a commanding lead.

While SGOL has the same objective of tracking gold's price as its competitors, its managers purposely chose Switzerland to store its physical gold rather than the popular destination of London. Their assumption is that in case of war or terrorism, Switzerland would fare better from a safety perspective.

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